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Tough Third Quarter Leaves Subscribers, Profits in its Wake

Fri, 11/06/2009 - 12:19pm
Maisie Ramsay

By now, it’s well-known that there’s no such thing as organically growing your subscriber base. With market saturation hovering above 90 percent, the only way to get new customers these days is to steal them or buy them.

That dynamic played out dramatically in this year’s third-quarter results, with some carriers posting dramatic improvements while others posted equally dramatic shortcomings.

AT&T sat highest on the winner’s podium with the highest third-quarter net gain in subscribers in the company’s history: 2 million. On top the impressive net adds, the company’s churn rate hit a record low thanks to the iPhone effect, and its postpaid ARPU rose almost 4 percent.

Verizon Wireless was not so lucky. The carrier, which reported four days after AT&T on Oct. 26, saw ARPU slip, churn rise and profits fall in its third quarter. Its net adds also fell behind AT&T’s, coming in at just 1.2 million.

Next on the quarterly chopping block was Sprint Nextel, whose losses widened 46 percent to $478 million. The worsening losses came as a disappointment to the carrier, which has dramatically improved its customer care, beefed up its handset lineup, strengthened its network and rolled out some of the lowest postpaid prices around. Sprint lost more than money, however: The company lost 135,000 net retail subscribers and saw its churn rate tick up to 2.17 percent.

At least Sprint wasn’t alone in its difficult third quarter. T-Mobile, MetroPCS, U.S. Cellular and Leap Wireless International all had some rough spots over the course of the quarter. T-Mobile lost 77,000 customers in the third quarter and saw declines in both profits and ARPU. Shares of MetroPCS took a dive after the prepaid carrier’s subscriber growth slowed by 73 percent; U.S. Cellular’s third-quarter profits fell 60 percent; and Leap Wireless’ losses grew on rising churn and sluggish growth.

Overall, it was a tough quarter for the wireless industry. Most everyone, AT&T excluded, came out with at least minor bruises. Next quarter, the industry will see the efficacy of Verizon’s counter attack on the iPhone with the Motorola DROID; whether Sprint’s new handset lineup succeeds; and just how competitive the prepaid space can get. As always with wireless, it’s sure to be eventful.

 

 

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